Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open +15pts, with Asian markets shrugging off the IMF’s cut to global growth estimates (the World Bank had already warned on Asia yesterday) and Chinese equities hitting 3-week highs on speculation of more monetary stimulus being on its way (to fight flagging growth) – this after the Peoples bank of China (PBOC) said policy must remain flexible and with a bias to help fight external weakness.

Japan negative as it plays catch up for Monday being a holiday and US markets gave little lead to the Asia with trading quiet on account of Columbus day celebrations. The positive reaction to Friday’s US jobs report seems but a distant memory with focus back on Spain and the “will it/won’t it ask for a bailout?” coupled with a waning of the impetus from central bank easing (ECB, Fed) needed to keep pushing equities higher given the increasing uncertainty regarding worldwide growth (World Bank, IMF cutting forecasts) and the possibility that US Q3 earnings disappoint.

Overnight macro data positive from the UK with better than expected retail sales and housing figures. Japan’s current account beat, but its trade deficit missed (slightly), while its Eco Watchers surveys were mixed. Aussie business conditions and confidence both deteriorated.

The results of yesterday’s Eurogroup meeting of finance ministers is that Greece was praised by the powers that be (incl. IMF) for efforts thus far, but in something akin to a mid-term school report it was told for the umpteenth time that it “must do better”, i.e. implement all measures agreed to reach budget cuts goal, and by Oct 18 Summit, if it wants to receive its next slice of aid. Although for all their efforts, the targets to be hit even by 2020 look increasingly pie in the sky.

The IMF now sees world growth of +3.3% in 2012 (revised down from 3.5%), and 2013 cut to 3.6% from 3.9%, with the Eurozone crisis and US fiscal situation the main concerns. Eurozone growth seen -0.4% (was -0.3%) in 2012 and 0.2% (was 0.7%) in 2013. UK now seen -0.4% this year (was 0.2%), US 1.3% (was 1.5%) while the elephant in the room China cut to 7.8% from 8.0% this year and 8.2% from 8.5% next year.

In FX and Commodities, the GBP/USD off its lows as safe haven seeking in the greenback slows up. EUR/USD remains in recovery from yesterday’s lows following the sharp-sell off on Friday as the USD was in demand following better macro data. GBP/EUR remains at 1-week lows on optimism Spain closer to asking for assistance.

Gold remains off its highs after the USD’s strengthening stalled the metal need February and November 2011 highs Oil prices seen US Light remain under pressure from stronger USD, however, Brent is back up at recent highs as Turkey/Syria tensions raise concerns about Middle East oil supplies.

Today’s focus is on the UK’s Manufacturing and Industrial Production updates – both expected to who a slowing in August on both a monthly and annual basis. The UK trade balance is seen deteriorating, with deficits widening which could have an impact on GBP. On the afternoon, look out for the NIESR’s UK September GDP estimate. Note that German Chancellor Merkel is in Athens to see Greek PM Samaras, which is sure to cause tension on the streets given the Greeks’ attitudes to her. Most important of all though is Alcoa kicking off the US Q3 earnings season after the US close.

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Overnight Macro Data: (Source: Reuters/DJ Newswires)

• UK                    BRC Sales                                Better
• UK                    RICS House Prices                   Better
• Japan               Current Account                      Better
• Japan               Trade Balance                         Worse
• Aussie              Business Surveys                     Deteriorated
• Japan               Eco Watchers Surveys             Mixed
• See Live Macro calendar for all details

UK Company Headlines: (Source: Reuters/DJ Newswires)

• BHP Billiton to cut iron ore jobs due to tough conditions
• BP’s partners may sell out of joint TNK-BP venture
• BG eyes Australia LNG project stake sale to Tokyo Gas
• May Gurney says first-half trading in line with its expectations
• MITIE acquires home care services group Enara
• UK Mail H1 rev expected to rise 13 pct
• Informa buys analytics firm Zephyr Associates
• Hays Q1 group net fees fall, Asia slows
• Centamin retains target, gold output falls in Q3 from Q2
• Pennon buys Pulp Friction for 9 mln stg
• Inmarsat says third-quarter trading in line
• Barclays to acquire ING Direct UK
• ING sells ING Direct UK at 320 mln euro loss
• Vedanta Q2 iron ore falls
• Rio Tinto sees copper growth, “more cautious” on outlook
• Cairn India reports Q2 production
• Shell’s Nyhamna gas processing plan output reduced by 33 mcm/d